Lopezes didn’t get back Meralco on silver platter

POSTSCRIPT - Federico D. Pascual Jr. () - June 13, 2002 - 12:00am
PARADING MEDIOCRITY: The leading personages who were conspicuously absent from the P10-million Independence Day rites yesterday have their respective excuses and alibis, but their absence still set many people wondering what’s going on.

US Ambassador Francis Ricciardone and former presidents Fidel V. Ramos and Cory Aquino were not at the vin d’honneur formal toasts at Malacanang and the grand parade at the Luneta. Vice President Teofisto Guingano was also not around.

Naughty minds are thinking there must be a message somewhere.

It was also noticed that the applause at the vin d’honneur and during the speech of President Gloria Macapagal Arroyo at the Quirino grandstand was not as energetic as desired.

The civic-military parade failed to perk up the sparse Luneta crowd and those watching it on TV. We hate to say this, but the parade was a sorry spectacle that only showed how we have lagged behind our neighbors.

If we have nothing much to show with pride, let’s not parade it and fall flat on our faces attempting the impossible.
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BIGGEST STOCKHOLDER: Most people don’t know that the government actually holds the biggest share (24 percent) in the Manila Electric Co. (Meralco) that is often mistaken for a Lopez monopoly. The government holds three of the 11 board seats.

The Lopez family actually owns only 16 percent of equity, with the rest of the publicly traded shares in the hands of 85,000 stockholders. But mostly by sheer habit, most people and many of us in media refer to the utility company as a Lopez firm.

Lately a side issue being raised is how the Lopezes regained virtual control of what used to be the crown jewel of the pre-martial law business empire of the family.

We were surprised to read an assertion of a so-called "Kilusan Kontra sa Kalabisan ng PPA" that "prior to its return to its former owners (the Lopez family), Meralco was owned by the government which set up the Meralco Foundation Inc. from private funds . . . ."
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FLASHBACK: People who are angry with PPA (purchased power adjustment) doubling their electricity bill might just believe this erroneous statement. If not challenged, the misstatement might lend legitimacy to the Meralco Foundation that the dictator Ferdinand Marcos created to take over the Meralco under martial rule.

A flashback of what actually took place will help clarify matters. In 1961, the family patriarch Don Eugenio acquired Meralco from its American owners. The buyout, the largest financial deal of the time, was acknowledged as an economic milestone.

Controlling the entire line of power generation, transmission and distribution, Meralco was a monopoly. But there lies an argument for monopolies. In the 60s, we had the second lowest electricity rate in Asia, and brownouts were unheard of.

Meralco was doing just fine until Marcos entered the picture driven by a variety of reasons. Marcos, who came from Ilocandia to carve a name for himself in politics in the nation’s capital (his business acquisitions were to come to light later in scandalous revelations) had always looked at the Lopezes with dread and envy.
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MERALCO – MAIN DISH: Don Eugenio was widely regarded as a kingmaker. Anybody who wanted to become president must win his good graces. While Marcos played ball with the Lopezes – taking Fernando Lopez as his vice president in his last term before martial law – he had resented his having to pay obeisance to them.

On the first day of martial rule in September 1972, Marcos grabbed the giant ABS-CBN network for eventual turnover to his crony Roberto S. Benedicto. He closed the influential Manila Chronicle, whose facilities were subsequently used by presidential in-law Kokoy Romualdez to publish the Times Journal, which is under sequestration to this day.

Elsewhere across the nation, Marcos enforcers seized other Lopez properties. But those were just the appetizers.

The main course was Meralco, which Marcos could not gobble right off because it had by then evolved into a public corporation with over 12,000 stockholders. The wily Marcos knew that forcible takeover would not sit well with the public. Takeover had to come in adroit maneuvers under cloak of legality.
* * *
ANTI-LOPEZ BLITZ: As opening move, Marcos snatched a hostage. He threw Geny Lopez, eldest son of Don Eugenio, to prison on trumped-up charges. That was in November ‘72, just two months into martial law.

In 1973, the regime sprang a blitz calculated to bring Meralco down and the Lopezes to their knees:

• The Board of Power, forerunner of the Energy Regulatory Commission, threw out an already approved Meralco rate increase, inflicting serious financial trouble on the company.

• The dictator’s designated Meralco hitmen – then Executive Secretary Alejandro Melchor and Kokoy Romualdez – connived to make life difficult for Meralco executives. At least 38 Meralco officials had to resign under duress.

• The Central Bank, then under Gov. Gregorio Licaros, closed lending windows to Meralco, further fouling up its finances.
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BOUGHT FOR PEANUTS: All the while, Marcos made no secret of his lusting for Meralco. In no uncertain terms, the regime impressed on Don Eugenio that Meralco was the price he had to pay for the release of his son Geny.

In 1974, Don Eugenio – stricken with terminal cancer and living in exile in California – agreed to sell his family’s 27.5 percent ownership of Meralco, then conservatively valued at $20 million, for a token down payment of P10,000 out of a purchase price of P150-million, balance payable when able.

The lucky supposed buyer was Meralco Foundation. This is not a government entity, but a private foundation organized by the dictator. It was set up with no funds, except for that P10,000 that served as down payment for control of Meralco.

The Meralco Foundation eventually defaulted on payments in 1985. The unpaid shares had to be reverted to the original owners.

Thus, Meralco is not, as Lopez detractors claim, "owned by the government which set up the Meralco Foundation from public funds . . . ."
* * *
SIGNED UNDER DURESS: Don Eugenio signed five letters endorsing the dictator’s program "to democratize wealth and property for the greater good of our people." It was of public knowledge that the letters were drafted by the dictator’s agents and signed by Lopez under duress.

Obviously, Don Eugenio agreed to practically give Meralco away to get his son Geny out of prison. It would be naïve to think Don Eugenio, one of the country’s business geniuses, would part with his flagship in a deal that has got to be the Grandfather of Fire Sales.

The tragedy was that while the ailing Don Eugenio signed away Meralco, he did not get his son back as promised by the dictator.

In July 1975, he succumbed to cancer in San Francisco even as his son, Geny, continued to languish in jail for capital charges. Geny eventually escaped with Serge Osmena (now a senator) in a daring caper immortalized in the movie "Eskapo."
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NO SILVER PLATTER: Former President Cory C. Aquino has been dragged into the fray with reckless allegations that she delivered Meralco back to the Lopezes on a silver platter. The facts do not bear this out.

The Lopezes regained some – not all – of their interests and assets in Meralco after a series of reviews conducted by then Justice Secretary Sedfrey Ordonez and the heads of government financial institutions (GFIs). The favorable recommendations of the review committees were affirmed by the Supreme Court.

The Lopezes got back some of their shares after five years (from 1986 to 1991) of reviews, hearings and deliberations by appropriate government agencies. The family ended up with 16-percent interests, the second biggest Meralco stockholder next to the government’s 24 percent.

The Lopezes have yet to regain their power-generation facilities that remain under the control of the National Power Corp. (Napocor) to which they were transferred by the dictator to make life difficult for the Lopezes.
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ABSURD TAKEOVER: Although the Lopezes do not own all of Meralco, they have deep feelings for what used to be crowning glory of the Lopez business empire.

The idea broached by a pair of congressmen for government to take over the Meralco is not likely to prosper for obvious reasons, but the Lopezes are not taking the suggestion lightly. They had lost Meralco once, and may just lose it again

Meralco operates on a franchise granted by government. As Meralco treasurer Rafael Andrada once said, "the franchise is not an exclusive right and this could be revoked anytime for the public interest."

If it’s any consolation to those who fear a government takeover, President Arroyo has dismissed the takeover idea as absurd, saying in effect that government would just make a bigger mess.
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ePOSTSCRIPT: You can read Postscript in advance, even before it sees print, simply by going to our personal website www.manilamail.com. While at our ManilaMail.com site, you can also peruse back issues of our column and review past discussions on certain subjects. E-mail can be sent to us at manilamail@pacific.net.ph.

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